Wednesday, September 02, 2015

Connecticut At The Crossroads

The following address was given to the Wallingford Rotary at IL Monticello Restaurant in Meriden on Sept 2.

I want to thank Mark Davis for inviting me to speak to you today. As you know, he’s been involved in the Wallingford Rotary for years. After you’ve put in productive years with Rotary, you acquire bragging rights, and this Rotary has much to boast of. Mark doesn’t hold back. He and others regard Rotary as the best volunteer social organization in the country and he’s proud to associate with this  Rotary in particular, which started in 1923 and has given nearly a million dollars in grants to nonprofits. You are to be congratulated on your energy, business intelligence and community concern.

This is a first for me – the first time I have served as a stand-in for a Rear Admiral; such things happen to a man only once or twice in a life time, and I plan to take full advantage of it.

I should introduce myself: I’m Don Pesci – no relation to Joe – and I’ve been a Connecticut columnist for about 35 years. Several years ago, I began a blog called “Connecticut Commentary: Red Notes From A Blue State,” a mouthful I know. I intended it as a repository for columns printed and not printed; so, virtually all the columns that have appeared in various papers in Connecticut and elsewhere may be found there. If you haven’t visited Connecticut Commentary, you have all these years been denying yourselves a joyful if somewhat sinful pleasure.

Today, I want to talk about Connecticut’s journey through our economic and social briar patch. I’m sure everyone here has felt the rip of thorns during the past few decades. I’ll try to be informative AND entertaining; so if you find something laugh-provoking, let’er rip. There’s nothing more painful than a belly-full of suppressed laughter. 

People in this room may have noticed that it’s becoming increasingly difficult to show empathy for Governor Dannel Malloy, even on those rare occasions when he may deserve it.

Some politicians in state government are very good at slathering empathy over everything their tongues touch, and Mr. Malloy is one of these.

Let me cite just one example among many. When a disturbed gunman in Sandy Hook opened fire with an AR 15 on school children and their wards some years back, Mr. Malloy empathized – as indeed he should have. He made common cause with Republicans in the General Assembly, and together they passed the most stringent gun laws in the nation. These measures, it is rarely noted, did not reduce at all the criminal use of guns in our major cities; Hartford, Connecticut’s Capital city, last month showed up on one of those “worst in the nation” surveys as the most violent city in New England; Bridgeport and New Haven were also in the running.

Republicans in the General Assembly who, upon Mr. Malloy’s ascension to the governorship, found themselves effectively marginalized, leapt at the chance to participate meaningfully in shaping Connecticut’s gun-law future.  It was like old times, when the presence of a Republican governor, a Rowland or a Rell, fairly assured a modicum of bipartisanship. This joy was short-lived, and soon Mr. Malloy began to move in his old rut. If your ambition is to establish a one party state, you cannot allow bipartisan participation in budgets.

When Mr. Malloy was concocting his first budget, I noted that his chief ambition during his term in office would be to marginalize the Republican Party. Unsurprisingly, this is also the chief ambition of the most progressive President in modern times, Barack Obama, who recently has concluded a friendship “deal” – none dare call it a treaty -- with Iran, which is on a par with inviting Hannibal Lecter to lunch.

Parties atrophy when they do not participate in the life of the state. When Mr. Malloy was putting together his first biennial budget, he shooed Republicans from the room; ditto his second budget; ditto all the revisions worked out between Mr. Malloy and SEBAC, the union conglomerate authorized to represent union interests in contract negotiations. A budget is the single most important piece of legislation passed in the General Assembly each fiscal year, because it determines the economic fate of the state. Republicans were pointedly excluded from leaving ANY fingerprints on ANY of Mr. Malloy’s budgets or budget revisions.

Thrown out of budget negotiations, Republicans have now begun vigorously to push back: They no longer empathize with Mr. Malloy’s economic and social policy prescriptions. Put it this way: They have seen the progressive future, and they know it doesn’t work. They are not alone.

This year, after having submitted to the Democrat controlled General Assembly a budget that was about a billion dollars out of balance, Mr. Malloy announced that budgets were, after all, corporate constructions; the legislature would do what legislatures generally do to gubernatorial budgets. And the legislature DID indeed finesse the budget. It raised taxes on corporations.

Now, just in case there is anyone in this room who supposes that Mr. Malloy and his co-conspirators in the General Assembly – Speaker of the House Brendan Sharkey and President Pro Tem of the Senate Martin Looney – would ever, ever, ever seriously entertain the possibility of balancing budgets by making rational long term cuts in spending, I should offer a trigger warning: Hell will freeze over first. Mr. Malloy and majority Democrats are authors of both the largest tax increase in Connecticut history, levied when Mr. Malloy first attained office, and the second largest tax increase in state history, the most recent imposition. Did anyone think, pre-Malloy, that no one could possibly have trumped Lowell Weicker, the father of Connecticut’s income tax, in revenue production? Welcome to Connecticut’s Progressive New World Order.

Any show of surprise was then and now, to my way of thing, surprising. If you have only one key on your political harpsicord – increase taxes – you cannot be expected to play Bach.

Mr. Malloy’s partisan associates in the General Assembly raised taxes, a traditional false solution to budget woes that puts Connecticut’s feet on a path of certain dissolution.  The problem in Connecticut is reckless spending; and we know that problem can only be exacerbated by tax increases.  Belatedly, Connecticut’s industrial leaders – frequent and generous contributors over the years to Democratic campaigns in the state – have begun publicly to run red flags up their flagpoles. Fairfield’s General Electric (GE), among others, has pushed back. It is, as you know, very unusual for companies publicly to mount the political stage and up-stage, so to speak, politicians who more or less own the political theater. This public push-back came as a shock to any number of politicians who in the past had been used to entertaining behind-the-curtain objections from businessmen whose critical remarks they later could safely ignore. 

Just before Mr. Malloy’s recent out-of-balance budget was finalized, Republicans and business leaders across the state held a desperate public hearing on the budget, the legislative equivalent of Custer’s Last Stand. It was well attended by many members of the Connecticut Business and Industries Association (CBIA) – but not the governor, who was preparing to put a new feather in his cap: Head of the Democratic Governors Association.

The Malloy/Sharkey/Looney budget was passed in the feverish last moments of the legislative session – GET THIS -- as an emergency certification bill, which meant that no alteration and no debate on the final product, in what some are pleased to think is the most democratic and rational body in the state, would be permitted.

The chief villain of the Malloy/Sharkey/Looney budget, CEO of GE Jeff Immelt thought, was the unitary tax. This is a tax on business enterprise outside the state. If you have exhausted tax possibilities in the state – and Connecticut’s tax prone legislators long since have done this -- your best recourse is to tax someone outside the state. Not for nothing did Maggie Thatcher warn that in a quasi-socialist state the governing authority soon will run out of other people’s money.

The unitary tax was a bridge too far for Mr. Immelt, and he announced that GE was considering pulling up roots in Connecticut. Almost immediately, Governors from other states, among them Mario Cuomo of New York, began biting at the worm. Mr. Cuomo, unlike his counterpart in New Jersey, Chris Christie, Mr. Malloy’s politically too convenient bete-noir, is a Democrat, and so Mr. Malloy’s criticism of New York’s Democratic poacher was muted. But just wait until the two meet in the cloakroom at the next Democratic Governors Association slug-fest. Self-dubbed “the porcupine,” Mr. Malloy is known for throwing quills at people who cross him. Most recently, Mayor of Harford Pedro Segarra caught one in his dear little heart. Mr. Segarra is defending his mayoralty against Mr. Malloy’s former chief council, the estimable Luke Bronin, whose real world executive experience could not fill a thimble. This is not to say that a Bronin/Malloy administration would not be an improvement over a Segarra administration.

Of course, we now know that political experience in office is no longer necessary in the postmodern world. And sometimes experience is a detriment, says no less an authority than Donald Trump and, for that matter, a pre-Presidential Barack Obama. We may now add Mr. Bronin to the list. If you want hope and change in the post-modern political universe, it’s best to rely upon politicians used to wandering in strange paths. The tried and true old road leads to the tried and true brightly shining city on a hill – but who any more wants to go there? It's much more useful politically for demagogues to tar opponents as benighted males conducting a mythical war on women; or, better still, medieval terrorists – one of the newest arrows in Hillary Clinton’s campaign quiver.

As soon as business leaders stepped forward on the public stage to issue rational warnings, progressive politicians in Connecticut took umbrage. It was a rare joy to hear them blubbering and stammering. Speaker Sharkey said that GE complaints on over-taxation and oppressive regulation rang hollow because GE paid no taxes. GE Capital paid little in taxes because GE Capital, caught in the maelstrom of a ruinous , needlessly protracted recession, made piddling profits the last few years. The progressives want to be able to drain the udders of businessmen of the mother’s milk of politics – taxes and political contributions – without having to put up with the cows’ plaintive mooing.

The resistance of the business community in Connecticut – the loud, public murmurings of discontent, even at this late hour – may be a hopeful sign marking the end of a long collaboration between progressive politics and some – I must stress some – businessmen who hope by hook or crook to wheedle progressives in power to their corner of the barracks so they might gain an advantage over their competitors. This is crony capitalism in all its glory. I’ve been raising a howl against it for ages.

And I am not alone.

Bill Buckley, the founder of National Review, the premier conservative magazine in the country, explained why failing enterprises should be permitted to fail in a 1981 address to students at the Cornell University Graduate School of Business. This is what he said:

"I desire, perversely, to sing a song of praise to failure; as well as, of course, to success; and to urge that we reappraise the dialectical voltage generated by these two polarities… Public policy must tolerate, indeed anticipate, economic failure (italics original).”

This golden perception is the obverse of crony capitalism. Crony capitalism -- which would not be possible in the absence of crony politicians – is a perversion of market capitalism.

The enemies of sound business practice in our day are: crony capitalism, progressivism – a doctrine that recognizes no limits to governmental authority, not even constitutional restraints or the more mundane restraints imposed on us by a frank recognition of reality – the one party state, runaway spending, and what I have elsewhere called salvational politics, the ruinous notion that all problems may be solved by heroic politicians such as, to bring this talk back to its beginning, Mr. Malloy, Mr. Obama and Mr. Trump.

We in Connecticut have arrived at a tipping point: Given our present circumstances, to do nothing is to do something. We no longer have the luxury of passive resistance. There is more intellectual firepower in this room alone than may be found in most other associations. I would gratify me to think it’s possible that here an effective resistance to the tyranny of inertia may be mounted, and that with courage and persistence we may find a way back to normalcy, justice, sanity and reality.

Once again, thank you for inviting me. If there are any questions, I’ll try my best to answer them.
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